SMC likely to delist brewery unit

Officials of San Miguel Corp. (SMC) and Japanâ€™s Kirin Holdings are meeting this week to decide on whether to keep their joint venture San Miguel Brewery Inc. a publicly listed firm or proceed with its voluntary delisting,Â just four years after the beer maker went public.

At the sidelines of SMBâ€™s shareholdersâ€™ meeting on Tuesday, SMC president Ramon Ang reiterated that the diversified conglomerate will not reduce its controlling 51 percent stake in SMB. This leaves the decision to delist the countryâ€™s biggest beer maker from the Philippine Stock Exchange in the hands of Kirin, which owns the remaining 48 percent.

SMB currently has a public ownership level of just 0.6 percent, well below the 10 percent required by the PSE, which will start suspending noncompliant firms beginning 2013 before the bourse itself begins delisting procedures.

â€œWe are not going to sell anything from our 51 percent. If they [Kirin] are not willing to bring down their stake, we will go for delisting. That is for sure,â€ Ang told reporters, while expressing his opinion that Kirin may not be keen on cutting its position in SMB.

â€œKirin is very bullish with this investment. They donâ€™t want to sell anything, not even for a big amount,â€ Ang said.

He forecast that SMB will grow by â€œdouble-digitsâ€ in terms of sales and net income this year.

â€œSo most likely, if the PSE will insist on the deadline, delisting [ will follow],â€ he added in Filipino. He said the partners will make a tender offer for the shares held by the public.

Ang said the potential delisting of SMB would result in lower costs as it would no longer be subject to the reportorial requirements for public companies.

It could be a big blow to the PSE, however, given the size of SMBâ€™s operation.

â€œ$10 billon will be lost from the PSE,â€ Ang said, referring to the beer makerâ€™s market capitalization of P453.83 billion, based on current prices.

Ang said SMBâ€™s growth initiatives will continue as it looks to establish new brewery facilities in growing Southeast Asian markets like Cambodia, Myanmar and Laos. He said the plants would cost a minimum of $100 million to set up.

“The plants are under study,” Ang said as he declined to comment on a specific timeframe.

SMB also exports to markets like Sudan, Singapore, Malaysia, Taiwan and South Korea and in emerging markets in Africa and the Middle East.

SMBâ€™s consolidated revenues reached P18.3 billion in the first three months of the year, up 5 percent.

Its operating income grew by 5 percent to P5.3 billion as international volumes also grew 9 percent.

About Nick Raquel

Nick Raquel is a Sun Life Unit Manager and the blogger behind MutualFundPH.com. He is a Certified Public Accountant (CPA). You may contact him through this contact form or call or text him directly at +63 917 813 6261.

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